CHAPTER 2 accounting information system Flashcards
what are the 2 types of transactions
1)cash transactions
2)credit transactions
define cash transaction
cash payemnt are made/ received immediatley upon goods sold/purchase
define credit transaction
credit transactions are made or received at a later date after purchase or sale
identify the accounting cycle
stage 1 - identify and record
stage 2 - adjust
stage 3 - report
stage 4 - close
state the accounting information system
- source document
- journal
- ledger
- trial balance
- financial statements
define source document
- the original record of a transaction which provides the details of the transactions
what does source document contain
source documents contain date, parties involved, value and description of the transaction
define journal
journal is a daily record book containing transactions organised by date
define ledger
a book that contains account which is a consolidation of all transaction relating to specific assets, liabilities, equity,income and expenses
define trial balance
trial balance is a summary of the ending balances of each ledger account at a specified date
what consits in financial statements
financial stements consisits of
1) financial performance
2)financial position
define financial performance
a report on income, expenses and profit/losses over a period of time
define financial position
a report of assets, liabilities and equity at a specified date
state the 3 purpose of source document
1) provides proof that transactions have occurred
2) to help in audit,checking or future refernce
3) provide the information for the accurate recording of the transactions
list the 7 source documents
- reciept
2.invoice
3.credit note
4.debit note
5.remittance advice
6.payment voucher - bank statement
state the purpose of reciept
to acknowledge that payment recieved for good sold or service provided
state the purpose of invoice
to inform credit customer the amount owed for the goods sold or r service provided on credit
state the purpose of credit note
to inform credit customer the reduction in amount owed due to ocercharging or retrun of goods
state the purpose of debit note
debit note to inform credit customer the increase in amount owed due to previous undercharging
state the purpose of remittance advice
to inform the credit customer the payment of a specific invoice
state the purpose of payment voucher
an internal document to support payment to credit supplier, must be supported by original suppliers invoice
state the purpose of bank statement
a monthly record sent by the bank giving details of withdrawls and deposits. used to tally and check against the business records in the cash at bank account
